UCC mortgage lien confusion - real estate vs personal property filing?

You definitely need both filings for proper protection. The mortgage covers the real estate, but UCC-1 is essential for the personal property/equipment. The tricky part is determining what constitutes fixtures versus equipment - fixtures typically get covered under the real estate mortgage, but removable equipment needs the UCC filing.

That's what I was thinking, but the conveyor system is permanently attached. Does that make it a fixture automatically?

Not automatically - fixture determination depends on several factors including intent, method of attachment, and whether removal would damage the property. When in doubt, file both to be safe.

I ran into something similar last year. We ended up filing a UCC-1 with a fixture filing designation to cover the gray-area items. Better to over-file than under-file when you're securing millions in financing.

How did you handle the collateral description for items that could be either fixtures or equipment?

We listed everything specifically and included language covering 'all equipment whether or not constituting fixtures.' Our attorney recommended being comprehensive rather than trying to parse each item.

Just went through this headache last month! Had mortgage docs and UCC-1 that didn't align on the equipment descriptions. Almost caused a delay at closing when the title company caught the inconsistency. I ended up using Certana.ai's document checker to upload both sets of docs and it flagged exactly where the descriptions didn't match up. Saved me from a potential lien priority issue.

What kind of inconsistencies did it catch? Was it just wording differences or more substantive issues?

Both actually. Some equipment was described differently between docs, and there were serial numbers in one but not the other. The tool showed me exactly which items needed alignment.

That's smart - document consistency is crucial when you have overlapping security interests. Inconsistent descriptions can create gaps in coverage.

This is why I hate mixed collateral deals!!! The mortgage covers real estate, UCC covers personal property, but then you have these stupid fixture issues that nobody can agree on. Last deal I did, the appraiser said something was a fixture, the UCC attorney said it was equipment, and the real estate attorney said it depended on state law. What a mess.

Tell me about it. Three different professionals, three different opinions. How did you resolve it?

Filed everything everywhere. UCC-1 regular filing, UCC-1 fixture filing, and made sure the mortgage covered it too. Overkill maybe but I slept better.

The fixture vs equipment distinction varies by state too. In some states, the test is primarily about removability without substantial damage. In others, it's more about the intent when the item was installed. You really need to check your specific state's fixture law.

We're in Ohio - do you know how they handle the fixture determination there?

Ohio follows the traditional three-part test: annexation, adaptation, and intention. But honestly, when you have conveyor systems, I'd lean toward treating them as fixtures unless they're clearly designed to be moved.

Agreed on Ohio law. The conveyor system sounds like it would likely be considered a fixture, but dual filing protects you either way.

Had a similar situation with a bakery financing. Ovens, mixers, some built-in cooling systems. We filed both mortgage and UCC-1, but made sure the UCC collateral description was broad enough to cover 'all equipment and fixtures.' Never had any issues with enforcement.

Did you do a separate fixture filing or just include fixture language in the regular UCC-1?

Regular UCC-1 with broad language. Our counsel said as long as we had the mortgage too, we were covered from all angles.

Wait, can someone explain the difference between a regular UCC-1 and a fixture filing? I thought a UCC-1 was a UCC-1...

A fixture filing is a special type of UCC-1 that gets filed in the real estate records along with the UCC records. It's for items that are attached to real property but might still be considered personal property for security purposes.

So it's like extra protection for items that could go either way?

Exactly. It gives you priority against real estate claimants while still maintaining your UCC security interest.

I've been dealing with these mixed collateral situations for 15 years. The key is coordination between your real estate and UCC documentation. Make sure your mortgage doesn't inadvertently exclude items you're claiming under the UCC, and vice versa. Also, consider the timing - UCC-1 can be filed anytime within certain limits, but mortgage recording needs to happen at closing.

Good point about timing. We're planning to file the UCC-1 right after closing. Is there any advantage to filing it before?

You can file it anytime, but I usually do it just before or right after closing. No real advantage to filing early unless you're worried about other creditors jumping in.

Pro tip from someone who learned the hard way: photograph and document everything before you file. If there's ever a dispute about what was or wasn't included, having visual evidence of the installation and attachment method can make all the difference in court.

That's brilliant. I wouldn't have thought of that. Do you keep the photos with your loan files?

Absolutely. Part of our standard collateral documentation now. Saved us once when a debtor tried to claim something was removable equipment when it clearly wasn't.

Smart approach. We started doing something similar after a dispute over what constituted 'machinery' vs 'fixtures' in a food processing plant.

Update from my earlier post - I mentioned using Certana.ai for document checking. Just tried their new workflow for mortgage + UCC consistency and it's actually pretty slick. Upload both docs and it shows you exactly where your collateral descriptions might conflict or leave gaps. Worth checking out if you're doing these complex deals regularly.

Does it handle fixture vs equipment distinctions or just flag description inconsistencies?

More about consistency between documents. It won't make legal determinations about fixtures, but it'll catch when your mortgage says one thing and your UCC says another.

Exactly what I found useful too. The legal analysis still requires an attorney, but catching document inconsistencies before closing is huge.